Response to the Message from the Vice Chancellor to USS members on 14 November 2014.

Bristol UCU’s Executive Committee welcomes Sir Eric Thomas’ contribution to the debate on USS pensions and his acknowledgement that the pension offer is at the heart of the University’s ability to attract and retain outstanding staff. Like Sir Eric, we are not pensions experts but we, too, assisted by UCU’s national experts and actuaries, and the collective expertise of concerned academics and union members across the country, have spent considerable time familiarising ourselves with the various issues.

These issues, and our differences with the Universities UK (UUK) position, have revolved around the extent of the deficit in the USS fund; the means by which this deficit can be corrected to meet statutory requirements; and the process by which those decisions are being considered and made. In addition, we are worried by aspects of the industrial relations landscape that Sir Eric did not address.

On the process for pension scheme change

In our view, the process is fundamental and we will address that first. It is crucial to follow an open and consultative process if our members and, indeed, all staff in USS are to have faith that their interests have been fully considered and robustly represented alongside the various competing and often contradictory interests of the Pensions Regulator, the USS Trustees, and the sector employers as represented by Vice Chancellors and their Finance and HR Directors acting through UUK. The USS constitution decrees that the only way that USS rule changes can be made is by a majority vote of a Joint Negotiating Committee (JNC) consisting of equal numbers of UUK and UCU representatives and a voting Chair, currently Sir Andrew Cubie. It is worth making very clear that, as the JNC’s name suggests, this must be a true and fair joint negotiation. The strong view of our representatives on that JNC is that the employers’ proposals were being presented as a fait accompli which Sir Andrew Cubie might be induced to rubber-stamp without adequate negotiation having taken place. For that reason, the main aim of our industrial action to date has been to secure proper and meaningful negotiation and we are very pleased that UUK have at last agreed not to press their proposals to a vote until a series of formal and informal negotiating meetings have taken place.

On the USS deficit

Few of our members doubt that a significant fund deficit will be declared under the current valuation methodology. Sir Eric correctly points out that the statutory regulatory regime was set up to prevent a repeat of Robert Maxwell’s fraudulent misappropriation of the Mirror Group pension fund, and we approve of such safeguards. However, Sir Eric does not mention that this particular valuation methodology is still relatively new and untested; that its design did not anticipate the aberrant macro-economic conditions we have experienced since 2008; that the artificial “Gilts Plus” assumption used by USS it is certain to yield extremely pessimistic valuations when Gilt rates are at rock-bottom; and that other more forgiving (and potentially more realistic) ‘internal’ valuation criteria have proved acceptable to the Pensions Regulator elsewhere. Nor does Sir Eric mention that the over-riding interest of the Pensions Regulator is to prevent a pension scheme from ever coming close to “falling back on the state”, which was until very recently the ultimate guarantor of our strong sector covenant. This is about more than just the ‘affordability’ of pensions. In the eyes of many respected experts and actuaries, a methodology introduced to prevent one form of pension robbery is capable of being used opportunistically and politically to legitimate a different form of pension robbery. It is becoming clear that the current valuation regime is a powerful tool to assist an ongoing deliberate and concerted attempt to shift the balance of risk from governments and employers onto ordinary people; and as a tool to hasten the demise of final salary, and perhaps ultimately, all defined-benefit pension schemes. As a union, we will continue to argue against a methodology that is patently unsuitable for large multi-employer defined benefit schemes in the current economic climate. Unlike Sir Eric, we do not think that it is sensible to make radical and irreversible changes to staff pensions when so many fundamentals are still open to serious dispute.

Regarding the current valuation round, we anticipate that credible changes to the actuarial assumptions, alternative scheme benefit designs, and other legitimate measures are capable of substantially reducing the declared deficit and thus reducing its impact on the sector’s pension policy whilst ensuring a defined benefit scheme that is sustainable for the future. However, as Sir Eric suggests, that is largely a matter for the Trustees and actuaries to argue over and we are delighted that actuaries representing UCU, UUK and USS will finally all meet to discuss and transparently establish the USS funding position and latitude around the deficit to be declared.

On the proposed scheme changes

With regard to the means by which the final declared deficit should be dealt with, proper national negotiation is again vital. We welcome Sir Eric’s promise that he will be, “willing to support any combination of changes that will secure a sustainable future for the scheme and look to the USS JNC negotiations as the forum in which options should properly be explored” and that he, “owes a duty to staff to secure the best working conditions and reward that is possible and affordable”. We would only ask that Sir Eric uses his considerable influence to ensure that the views of USS and UCU members are fed into those national negotiations at an early stage and that genuine negotiation and proper consultation with staff takes place, not just a token formal USS consultation after the die has been cast. Whatever the strict legal interpretation of the employment contract may be, most staff view the current pension promise as an essential part of an implied contract that they have with the University and around which they have based extremely significant career and personal decisions. Radical cutbacks and changes made too fast are a betrayal of a promise and a betrayal of trust. Changes that amount to the biggest attack ever on the HE remuneration package, and which are likely to have their greatest impact on research-intensive and career-oriented universities such as ours, will have unintended and undesirable consequences for recruitment, retention and goodwill.

We understand that, unlike the Teachers’ Pension Scheme and other schemes that staff in our sector belong to or transfer between, USS itself is not a public sector scheme backed by the taxpayer. However, we wish that Sir Eric would make more of the anomalies and unfairness that this creates and be seen to use his considerable good offices to argue for greater consistency. What sense does it make that a member of staff at a pre-92 University such as Bristol could now enjoy, if that is the word, a substantially worse pension than an equivalent colleague in UWE? What effect does that have on morale, recruitment and retention of talented staff; and thus on the student experience? How can this possibly be justified on any grounds other than the narrowly financial, and are financial and market-based arguments now the only ones to influence sector pension policy? How can HE have allowed itself to get into such a manifestly divisive and unjust position? We believe that the discrepancy in benefits between USS and TPS is unsustainable and a key area for negotiation.

On the industrial relations context

A great many of our members are now very worried about their pension prospects, concerned about our ability to continue to recruit the best staff, angry about the proposals as framed, and feel betrayed. The situation will surely be inflamed if staff are fobbed off with inaccurate or incomplete information, or subject to threats, and the University’s record so far in that respect has been poor.

  1. The local information and ‘roadshows’ deployed to explain the proposals have been appallingly short of realistic detail and have left many people very anxious and with important questions unanswered. The financial illustrations used did not show realistic career pathways and it has been left to UCU actuaries to flesh out and publicise their true impact, which are much more serious than UUK implied. People worry about important questions that nobody seems able to clarify locally or nationally (about AVCs, about how the salary cap on a hybrid scheme would work for part-timers, and so on). If this was a genuine attempt at information-giving, consultation and persuasion then it backfired – to many of our serious and intelligent staff it came across more like a rushed, cheap and unconvincing public-relations exercise to try to sell a pig in a poke.
  2. The University of Bristol has a generally good record of consulting its trade unions on matters of concern to staff, so why has it refused to share its submission to the UUK and USS consultations? We have no reason not to believe Sir Eric when he says that the University has, “worked hard to influence the employers’ position and will continue to do”. But would it not give us more faith to see what the University has been saying, and in what direction that influence was being exerted? We disagree with Sir Eric that it is appropriate to keep Bristol’s position private. As Sir Eric is well aware, most sector matters these days are being progressively localised as government support is withdrawn and institutions are put into competition. In reality, USS pensions are a quasi-national negotiation in which each employing institution has been engaged in lengthy and detailed individual consultation with UUK and the USS Trustees over the proposals, their institutional management’s willingness to bear pension contribution increases, and the extent of their willingness to back USS pensions through the employer covenant. Because each institution has been asked individually and at length to what extent it will back and support the pensions of its staff and the sector, then we, the staff whose pensions are in question, reserve the right to lobby at institutional level the managements who play such a crucial role in influencing national negotiations.
  3. Though we are pleased by the prospect of moving this dispute into a more positive context, the University’s punitive and threatening approach to pay deduction against members taking legitimate industrial action will now make positivity and trust much harder to achieve. We were shocked by the immediate and severe threat to deduct and continue to deduct 25% of pay from members whose marking and assessment duties amount to far less than 25% of their hours. We, and many of our members, were appalled and enraged by the additional and legally-questionable threat to join those taking industrial action in legal actions for damages, a vicious threat used by only a minority of universities and which eminent Professors of Law have condemned as bullying and quite probably a violation of the human rights of those engaged in lawful industrial action. This ill-founded and irresponsible threat could easily have caused the dispute to escalate into strike action. Southampton University has apologised for including this threat in their communications, saying it was a “mistake”. It would help us to move forward more positively if Sir Eric were likewise to apologise on behalf of Bristol University at this crucial juncture.

Finally, we are clear that we remain firmly in dispute, that we will continue the industrial action until our national office tells us to suspend or cease action, and that a condition of suspension is that no member of staff who has taken action will have pay deducted and that students will not have been adversely affected. We are very pleased that Sir Eric will not knowingly seek to play the needs of students off against staff in these very difficult times. In return, we would like to reassure him that nobody in this union wants students to be harmed if it is at all avoidable; especially not our talented and dedicated academic staff who give their all, and then some more, to help their students to succeed.

We wish Sir Eric well in his upcoming retirement and ask only that he does all in his power to help younger staff to accrue and enjoy a similarly decent level of pension provision in their retirement.

Bristol UCU Executive


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